Impact of financial inclusion and banking characteristics on banking stability in Indonesia
DOI:
https://doi.org/10.22437/ppd.v11i1.18227Keywords:
Banking stability, Financial inclusion, Panel dataAbstract
This study aims to examine the impact of financial inclusion and banking characteristics (bank size, Capital Adequacy Ratio (CAR), and Non-Performing Loans (NPL)) on the stability of the Indonesian banking sector from 2009 to 2019. The sample in this research comprises 22 banks in the BUKU 3 category and 7 banks in the BUKU 4 category. The data processing method employed is panel data analysis. The fixed effect model was selected as the most suitable model for this study. This research indicates that the financial inclusion variable significantly negatively impacts banking stability due to uneven access to financial inclusion and low financial literacy regarding banking products. Additionally, banking characteristics negatively influence banking stability through the NPL and bank size variables. In contrast, the CAR variable significantly positively affects the banking stability variable. Therefore, expanding financial access through financial education about utilizing and selecting financial service products that cater to the community's needs is essential. This will enhance the benefits of financial inclusion in society and subsequently positively affect banking stability in Indonesia.
Downloads
References
Ahamed, M. M., & Mallick, S. K. (2019). Is financial inclusion good for bank stability? International evidence. Journal of Economic Behavior and Organization, 157, 403–427. https://doi.org/10.1016/j.jebo.2017.07.027
Ahmad, F., Amin, A., & Faix, R. (2014). Impact of loan loss provision on bank profitability in Pakistan. The International Journal’s, 03(12), 34–41. https://www.researchgate.net/publication/279931829_Impact_of_Loan_Loss_Provision_on_Bank_Profitability_in_Pakistan
Alliance for Financial Inclusion. (2016). Policy frameworks to support women’s financial inclusion. http://www.afi-global.org/sites/default/files/publications/2016-08/2016-02-womenfi.1_0.pdf
Amatus, H., & Alireza, N. (2015). Financial inclusion and financial stability in Sub-Saharan Africa (SSA). The International Journal of Sosial Science, 36(1), 39–49. https://www.tijoss.com/TIjoss 36th Volume/5Amatus.pdf
Asian Development Bank. (2016). Digital financial services in the Pacific experience and regulatory issues. Asian Development Bank. https://www.adb.org/publications/digital-financial-services-pacific
Azwar. (2017). Analisis empiris inkluifitas keuangan syariah di Indonesia. BPPK, 10(1), 1–21. https://doi.org/https://doi.org/10.48108/jurnalbppk.v10i1.21
Baltagi, B. . (2008). Econometric analysis of Panel data (4th ed.). https://books.google.co.id/books?hl=id&lr=&id=oQdx_70Xmy0C&oi=fnd&pg=PA13&dq=Baltagi.+(2008).+Econometric+analysis+of+panel+data.+(chichester,+ed.).+john+wiley.&ots=xl1f-z3rLu&sig=jXnypzeofDzmHafFcdYuFBmUMBU&redir_esc=y#v=onepage&q&f=false
Bank Indonesia. (2011). Peraturan Bank Indonesia no 13/26/PBI/2011 tentang Perubahan atas peraturan Bank Indonesia tentang kualitas aktiva produktif dan pembentukan penyisihan penghapusan aktiva produktif. https://peraturan.bpk.go.id/Home/Details/137484/peraturan-bi-no-1326pbi2011#:~:text=Peraturan BI No. 13%2F26%2FPBI%2F2011 tentang Perubahan atas Peraturan,Aktiva Produktif Bank Perkreditan Rakyat %5BJDIH BPK RI%5D
Bank Indonesia. (2020). Statistik Sistem Keuangan Indonesia (SSKI). Bank Indonesia. https://www.bi.go.id/id/statistik/ekonomi-keuangan/sski/default.aspx#:~:text=Statistik Sistem Keuangan Indonesia %28SSKI%29 SSKI diterbitkan setiap,fokus kebijakan Makroprudensial%2FStabilitas Sistem Keuangan %28SSK%29 di Indonesia.
Barik, R., & Sharma, P. (2019). Analyzing the progress and prospects of financial inclusion in India. J Public Affairs, 19(4), 1–6. https://doi.org/10.1002/pa.1948
Baselga-pascual, L., Trujillo-ponce, A., & Cardone-riportella, C. (2015). Factors influencing bank risk in Europe: Evidence from the financial crisis. North American Journal of Economics and Finance, 34, 138–166. https://doi.org/10.1016/j.najef.2015.08.004
Beatty, A. L., & Liao, S. (2010). Do delays in expected loss reco gnition affect bank’ willingness to lend ? SSRN Electronic Journal, 1–52. https://doi.org/10.2139/ssrn.1463374
Bhattacharya, S., & Thakor, A. V. (1993). Contemporary banking theory. Journal of Financial Intermediation, 3(1), 2–50. https://doi.org/10.1006/jfin.1993.1001
Bourke, P. (1989). Concentration and other determinants of bank profitability in Europe, North America and Australia. Journal of Banking and Finance, 13, 64–79. https://doi.org/https://doi.org/10.1016/0378-4266(89)90020-4
Budiarti, A. E. (2012). PPAP menuju CKPN: Dampak terhadap kredit perbankan. Blog Pasca. http://blog.pasca.gunadarma.ac.id/2012/05/29/ppap-menuju-ckpn-dampak-terhadap-kredit-perbankan/
Carreta, A., Farina, V., Fiodelisi, F., Schwizer, P., & Lopes, F. S. S. (2015). Don’t stand so close to me: The role of supervisory style in banking stability. Journal of Banking & Finance, 52, 180–188. https://doi.org/10.1016/j.jbankfin.2014.09.015
Chaibi, H., & Ftiti, Z. (2015). Research in international business and finance credit risk determinants: Evidence from a cross-country study. Research in International Business and Finance, 33, 1–16. https://doi.org/10.1016/j.ribaf.2014.06.001
Cihak, M., Mare, D. S., & Melecky, M. (2016). The nexus of financial inclusion and financial stability: A study of trade-offs and synergies (WPS7722). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2811371
Departemen Pengembangan Akses Keuangan dan UMKM Bank Indonesia. (2014). Keuangan inklusif. Bank Indonesia. https://snki.go.id/buku-saku-keuangan-inklusif/
Dupas, P., Green, S., Keats, A., & Jonathan, R. (2012). Challenges in banking the rural poor: Evidence from Kenya’s western province. In Nber Working Paper Series (No. 17851; Vol. 3). https://doi.org/10.7208/chicago/9780226315867.003.0004
Goddard, J., Molyneux, P., & Wilson, J. O. . (2004). The profitability of European banks: A cross-sectional and dynamic panel analysis. The Manchester School, 72(3), 363–381. https://doi.org/doi:10.1111/j.1467-9957.2004.00397.x
Jelanti, D. (2020). Pengaruh rasio profitabilitas, free cash flow, dan leverage terhadap manajemen laba. Madani, 3(2), 289–303. https://doi.org/https://doi.org/10.33753/madani.v3i2.123
Karim, N. A., Al-Habshi, S. M. S. J., & Abduh, M. (2016). Macroeconomics indicators and bank stability: A case of banking in Indonesia. Buletin Ekonomi Moneter Dan Perbankan, 18(4), 431–448. https://doi.org/https://doi.org/10.21098/bemp.v18i4.609
Khan, H. R. (2011). Financial inclusion and financial stability: Are they two sides of the same coin ? Indian Bankers Association & Indian Overseas Bank, Chennai, 1–50. https://www.bis.org/review/r111229f.pdf
Köhler, M. (2014). Which banks are more risky? The impact of business models. Journal of Financial Stability, 16, 195–212. https://doi.org/10.1016/j.jfs.2014.02.005
Menicucci, E., & Paolucci, G. (2016). The determinants of bank profitability: Empirical evidence from European banking sector. Journal of Financial Reporting and Accounting, 14(1), 86–115. https://doi.org/10.1108/JFRA-05-2015-0060
Mishkin, F. S. (1999). Financial consolidation: Dangers and opportunities. Journal of Banking & Finance, 23, 675–691. https://doi.org/https://doi.org/10.1016/S0378-4266(98)00084-3
Nkusu, M. (2011). Nonperforming loans and Macrofinancial vulnerabilities in advanced economies. https://www.imf.org/external/pubs/ft/wp/2011/wp11161.pdf
Odundo, O. G., & Orwaru, M. J. (2018). Bank size and financial stability of commercial bank in Kenya: Empirical evidence. Journal of Emerging Issues in Economies, Finance and Banking, 7(1), 2667–2680. https://doi.org/10.5430/ijfr.v10n6p250
Organisation for Economic Cooperation and Development. (2013). Education at a Glance 2013: OECD Indicators. 196. https://doi.org/http://dx.doi.org/10.1787/eag-2013-en
Otoritas Jasa Keuangan. (2016). Kegiatan usaha dan jaringan kantor berdasarkan modal inti bank. In Peraturan Otoritas Jasa Keuangan Nomor 6/POJK.03/2016. https://www.ojk.go.id/id/kanal/perbankan/regulasi/peraturan-ojk/Documents/Pages/pojk-kegiatan-usaha-dan-jaringan-kantor-berdasarkan-modal-inti-bank/SALINAN-POJK.6 BUKU.pdf
Survei nasional literasi dan inklusi keuangan 2016, Survey Report 1 (2016). https://sikapiuangmu.ojk.go.id/FrontEnd/images/Document/buku statistik_2016.pdf
Otoritas Jasa Keuangan. (2019). Survei nasional literasi dan inklusi keuangan 2019. In Survey Report. http://www.ojk.go.id/id/berita-dan-kegiatan/publikasi/Pages/Survei-Nasional-Literasi-dan-Inklusi-Keuangan-2019.aspx
Pogorzelski, G. Ms. (2017). Banks ’ loan loss provisions as a credit risk management instrument. https://ssl-kolegia.sgh.waw.pl/pl/KES/stopnie_naukowe_doktora/doktoraty/Documents/streszczenie G.Pogorzelski ENG.pdf
Putu, N. A. L. P., & Dewa, I. N. B. (2015). Kemampuan prediksi rasio keuangan dan ukuran bank pada risiko gagal bank. E-Jurnal Akuntansi, 12(2), 172–187. https://ojs.unud.ac.id/index.php/Akuntansi/article/view/10732
Rustendi, T. (2019). Pengaruh kecukupan modal terhadap stabilitas keuangan bank perkreditan rakyat. Jurnal Riset Akuntansi Dan Keuangan, 7(3), 531–544. https://doi.org/https://doi.org/10.17509/jrak.v7i3.18030
Sakarombe, U. (2019). Financial inclusion and bank stability in Zimbabwe. International Journal of Academic Research in Economics and Management Sciences, 5(2), 122–138. https://doi.org/10.6007/IJAREMS/v7-i4/5193
Sarma, M. (2012). Index of financial inclusion – A measure of financial sector inclusiveness. Berlin Working Papers on Money, Finance, Trade and Development Working, 07, 1–37. https://finance-and-trade.htw-berlin.de/fileadmin/HTW/Forschung/Money_Finance_Trade_Development/working_paper_series/wp_07_2012_Sarma_Index-of-Financial-Inclusion.pdf
Shim, J. (2019). Loan portfolio diversification, market structure and bank stability. Journal of Banking and Finance, 104, 103–115. https://doi.org/10.1016/j.jbankfin.2019.04.006
Torbira, L. L., & Zaagha, A. S. (2016). Capital adequacy measures and bank financial performance in Nigeria: A cointegration analysis. Journal of Finance and Economic Research, 3(1), 15–34. http://absudbfjournals.com/wp-content/uploads/2016/12/Capital-Adequacy-Measures-and-Bank-Financial-Performance-in-Nigeria.pdf
Van, L. T., Nguyen, N. T., & Vo, D. H. (2021). Financial inclusion and stability in the Asian Region using bank-level data. Borsa Istanbul Review, 21(1), 36–43. https://doi.org/10.1016/j.bir.2020.06.003
Zahangir, M. A., Morshed, M. P., & Abdur, M. R. (2013). Mobile money system: The Bangladesh experience. International Journal of Scientific and Research Publications, 3(10), 1–5. https://www.ijsrp.org/research-paper-1013/ijsrp-p2243.pdf
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Linda Rosalina, Diah Wahyuningsih
This work is licensed under a Creative Commons Attribution 4.0 International License.
